Investment Adviser to Pay $8 Million to Settle SEC Conflict of Interest Disclosure Charges

An investment adviser agreed to pay $8 million to settle SEC charges of failing to disclose conflicts of interest to retail customers.

According to the SEC, deVere USA, Inc. ("DVU") violated its fiduciary duty to clients by failing to disclose significant compensation that it received in connection with certain pension-related transactions. The SEC found that DVU made recommendations that UK expatriate clients transfer pension assets to certain overseas retirement plans. DVU, the SEC said, failed to disclose that the third-party product and service providers involved in the asset transfers provided compensation to an overseas DVU affiliate. The SEC further contended that DVU made material misrepresentations to the SEC and clients regarding the nature of the compensation arrangements and the benefits of the asset transfers.

To settle the charges, DVU agreed to the $8 million penalty, and to adhere to additional training, compliance and disclosure requirements. The SEC announced that the civil penalty will be used to establish a "Fair Fund" for distribution to clients impacted by the alleged misconduct. DVU agreed to the settlement without admitting or denying the SEC allegations.

In a related action, the SEC filed a Complaint in the U.S. District Court for the Southern District of New York charging DVU's former CEO and a former manager for allegedly misleading customers and failing to disclose conflicts of interest.